Jacksonville hospital poised to join Memorial

Thursday

Jan 2, 2014 at 10:03 PMJan 2, 2014 at 11:44 PM

Passavant Area Hospital plans to join Memorial Health System and become the Springfield-based system’s second-largest affiliate as soon as this spring. Officials from the independent 93-bed hospital say they are moving forward with the affiliation to ensure they can afford to maintain and expand services.

By Dean OlsenStaff Writer

JACKSONVILLE — Passavant Area Hospital plans to join Memorial Health System and become the Springfield-based system’s second-largest affiliate as soon as this spring.

Officials from the independent 93-bed hospital, the largest employer in Morgan County, say they are moving forward with the affiliation to ensure they can afford to maintain and expand services amid a morphing health-care landscape and changes that the federal Affordable Care Act have set in motion regarding the way health care is financed.

“It’s just becoming harder and harder to remain independent,” said Chester Wynn, 67, the longtime Passavant chief executive officer who will retire after a sponsorship transfer for the not-for-profit hospital is complete.

“We just need to become part of a bigger organization,” he said, adding that Passavant is strong financially. “We’re not doing this because we’re failing in any way. It’s always better to do this from a position of strength rather than wait until you’re on your last leg.”

The sponsorship transfer still needs approval from the Federal Trade Commission and the Illinois Health Facilities and Services Review Board. Officials from Memorial and Passavant signed an affiliation agreement in December, and Ed Curtis, Memorial’s chief executive officer, said he hopes the affiliation can become final by April 1.

The affiliation wouldn’t result in any layoffs among Passavant’s 900-member, non-union workforce, Wynn said, and employees would retain their seniority and wouldn’t see any decreases in pay or benefits.

Patient care would only improve, Wynn said.

“The patients are not going to see any change at all,” he said. “They will see the people they’ve always seen at the bedside.”

Affiliation, not acquisition

Passavant board chairwoman Janet Terry, executive director of Lincoln Land Community College’s sites in Jacksonville and Beardstown, said the boards of both Passavant and Memorial Health System unanimously approved the affiliation last month after beginning formal talks in spring 2013.

“This is a historic event,” she said.

The affiliation would “guard the quality and quantity of health-care services in the Jacksonville area,” she said.

Wynn and Curtis said the affiliation would strengthen medical services in Jacksonville and wouldn’t involve the transfer of any services to Memorial’s flagship hospital in Springfield, 500-bed Memorial Medical Center.

Passavant serves all of Morgan, Scott and Cass counties and parts of Greene, Macoupin, Brown and Pike counties.

The affiliation, which is different from a merger, would allow ownership of Passavant’s assets to remain in Jacksonville and wouldn’t involve any exchange of money, Curtis said.

Passavant, founded in 1875 and named after Lutheran minister William Passavant, would continue to have a board of directors, and two Passavant representatives would sit on the health system’s board.

With the affiliation, Memorial would gain geographic reach, and Passavant would benefit from technology, patient-safety, supply-purchasing and quality-improvement programs operated by the health system, Curtis said.

“If we can take some of that structure and process to help them continue to improve quality and safety, patients win and the community wins,” he said. “And if the quality and safety are high, people are going to stay in their own community for care.”

“I just don’t think bigger is better,” he said, though he noted that the system is in a joint partnership with Blessing Hospital in Quincy — through Central Illinois Corridor LLC — to expand specialized health-care services in west-central Illinois.

Memorial also is part of the BJC Collaborative, a Missouri-based partnership of Midwest hospital systems.

Memorial and Passavant have similar corporate cultures and values, Curtis and Wynn said.

The two organizations have become even more comfortable with each other through Memorial’s recent completion of a $27.6 million office building next to Passavant that is being rented exclusively to Memorial doctors and Springfield Clinic doctors, Terry said.

The health system operates a medical-equipment retail store in Jacksonville that is a joint venture between a Memorial affiliate and Passavant, and Memorial’s primary-care physician group, Memorial Physician Services, has operated in Jacksonville since 1995.

Dr. Marshall Hale, a veteran Memorial family physician who lives and works in Jacksonville and is president of Memorial Physician Services, said the system’s involvement in Passavant will bring “continued improvement in services.”

For example, Hale said, Passavant doesn’t have any infectious-disease specialists on a committee devoted to infection control at the hospital. But once the affiliation is final, such specialists from Springfield Clinic and Southern Illinois University School of Medicine who practice at Memorial Medical Center will be easily available to Passavant officials for consultation, Hale said.

Financially sound

The not-for-profit Memorial Health System posted $760 million in total revenues in the fiscal year ending in September. The system posted $40.6 million in profits on system operations and $78.6 million in profits with investment income included.

It’s legal for not-for-profit organizations to take in more revenues than expenses, but any so-called profits must be plowed back into the organization rather than issued as dividends.

Memorial Medical Center posted $592.3 million in total revenues, $44 million in profits from operations and $73.6 million in profits when including investment income in fiscal 2013.

Passavant posted $87.7 million in total revenues in the fiscal year ending in 2012 and almost $11.2 million in profits.

In fiscal 2013, Passavant posted $89 million in total revenues and an operational loss of $680,000, though unaudited numbers show investment income allowed the hospital to earn $4.4 million in revenues that exceeded expenses, Passavant spokeswoman Monica Eoff said.

Abraham Lincoln Memorial Hospital in Lincoln became a Memorial affiliate in 1994.

Memorial, which jointly sponsored St. Vincent Memorial Hospital in Taylorville with an order of nuns called the Adorers of the Blood of Christ for 12 years, became the sole sponsor in 2007. St. Vincent’s name was changed to Taylorville Memorial Hospital.

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